Page 62 - RusRPTOct21

6.1.2 Budget dynamics - specific issues...
Russia’s MinFin seeks to hike extraction and income taxes . In response to the rapid rise in global metal prices, the Russian government will increase mineral extraction taxes (MET) for all metallurgical products (except aluminum) and impose a new excise tax of 3% on liquid steel,MB Russia reports.
The new MET rate depends on the product: coal miners will pay MET at a rate of 1.5%, ore producers will pay 5.5%, and the MET will be raised 2.5 times for fertilizer producers.
These new taxes will total RUB546bn rubles ($7.5bn) from 2022-2024. “We have already agreed,” Finance Minister Anton Siluanov said after a meeting with Prime Minister Mikhail Mishushtin and members of the Russian Union of Industrialists and Entrepreneurs last week.
This is not the only way the Ministry of Finance hopes to increase taxes. They have also proposed raising income tax from 20% to 25-30% for those companies that have paid more in dividends than they have invested in the previous five years.
Owners of metallurgical and fertilizer companies claim an income tax expansion would be more fair than increasing the MET, saying, “Let the ones who have earned more, pay more.”
The Russian Steel Association, however, vehemently opposes an increase in income tax. They say such an increase would lead to the deterioration of the investment climate and violate the principles of the free market economy. “As world practice has shown, coercion like this is counterproductive,” their official statement said.
Although the Ministry of Finance aimed to implementoth tax reforms, adjustment of income tax haseen postponed until January 1, 2023. The new MET rates and excise tax will take effect next year.
Russianudget seeks $7.47bn from M&M & fertilizers taxation in 2022-24.
Interfax’s source said that the Russian Ministry of Finance expects the total proceeds for the budget from metallurgists, coal & fertilizer producers to be Rb546bn ($7.47bn) in 2022-24. Russia Budget seeks Rb546bn ($7.47bn) from taxes in ’22-24. This scenario implies cRb182bn ($2.49bn) per year for the period – at most a c2% hit to the industry's total EBITDA: mostly in line with our expectations.
Authorities have reportedly killed the freeze on defense spending and are increasing federal defense expenditures for 2022-2024y 15% instead of just matching inflation. Over 3 years, that looks like a 730 million ruble
62 RUSSIA Country Report October 2021 www.intellinews.com